Smokin listing cargo ship....
 

runs off after getting hit by three torps. Now from what I have read of the damage model for GW, that ship should should sink. But my question is, that when that ship sinks, does my boat need to be in visual range in order to get the credit?

If I remember correctly this was one of the problems with the vanilla installation of sh3, lost credit for ships sinking out of your visual contact.

Please read this and the GW Eratta Thread in this forum.

http://www.subsim.com/phpBB/viewtopic.php?t=50331

Also, please state exactly which type of cargo ship it was in-game.

In future please post problem topics on the GW Eratta Report thread.